Strategic management of GE

Submitted to: Prof. Hiren PatelSubmitted by: shivangi khambhati(19)

Purvi kshatriya(20)Aniruddh Magodra(21)

Introduction

The General Electric Company, or GE (NYSE: GE), is a multinational American technology and services conglomerate incorporated in the State of New York. In 2009, Forbes ranked GE as the world's largest company.The company has 323,000 employees around the world.

Founder(s)Thomas Edison, Elihu Thomson, & Edwin J.Houston

HeadquartersFairfield, Connecticut Key people

Jeffrey R. Immelt (Chairman and CEO)

Keith Sherin (Vice Chairman and CFO)

Gary M. Reiner (CIO and SVP)

Beth Comstock (CMO and SVP)

PRODUCTS

AviationJet enginesElectricityEntertainmentFinanceGas turbinesGenerationIndustrial AutomationLightingMedical imaging equipmentMedical technologyHealth informaticsElectric motorsLocomotivesWind turbines

CEO

jeffrey R. Immelt is the current chairman of the board and chief executive officer of GE. He was selected by GE's Board of Directors in 2000 to replace John Francis Welch Jr. (Jack Welch) following his retirement. Previously, Immelt had headed GE's Medical Systems division (now GE Healthcare) as its President and CEO. He has been with GE since 1982 and is on the board of two non-profit organizations.

His tenure as the Chairman and CEO started at a time of crisis — he took over the role on September 7, 2001 four days before the terrorist attacks on the United States, which killed two employees and cost GE's insurance business $600 million — as well as having a direct effect on the company's Aircraft Engines sector. Immelt has also been selected as one of President Obama's financial advisors concerning the economic rescue plan.

BRAND

GE has the fourth most recognized brand in the world, worth almost $49 billion.

CEO Jeffrey Immelt had a set of changes in the presentation of the brand commissioned in 2004, after he took the reins as chairman, to unify the diversified businesses of GE. The changes included a new corporate color palette, small modifications to the GE Logo, a new customized font (GE Inspira), and a new slogan, "imagination at work" replacing the longtime slogan "we bring good things to life", composed by David Lucas.

The standard requires many headlines to be lowercased and adds visual "white space" to documents and advertising to promote an open and approachable company. The changes were designed by Wolff Olins and are used extensively on GE's marketing, literature and website.

The value of the brand is reinforced by ownership of two letter domain ge.com. The domain was registered on August 5, 1986. GE is one of the few corporations worldwide to own a two letter domain name.The brand is also reflected by the GE New York Stock Exchange ticker symbol.

GE’s revenue in various operating business

General Electric is a large conglomerate composed of six distinct divisions.

GE Technology Infrastructure (25% of revenue) GE Healthcare GE Energy Infrastructure (21% of revenue) NBC Universal (9.0% of Revenue) NBC Universal, Inc. is a

media and entertainment company formed in May 2004 by the combination of General Electric's NBC with Vivendi Universal Entertainment, part of the French Media Group. The deal excluded the French Canal+ operations, which were retained by Vivendi. GE owns 80% of NBC Universal with the remaining 20% owned by Vivendi SA. The company develops, produces, and markets entertainment, news, and information to a global customer base. It is headquartered in the Rockefeller Plaza in Midtown Manhattan, New York City.

GE Capital Finance (37% of revenue) GE Consumer & Industrial (11.7% of revenue)

2008 Revenue by Segment (US$ billions)

General Electric Revenue and Income.

Vision, mission, goal

GOAL: GE set the goal of becoming number one or number two in every market it serves.

General Electric Mission Statement: "GE does not have a mission statement, per se, but its operating philosophy and business objectives are clearly articulated each year in the Letter to Shareowners, Employees and Customers in the Annual Report.."

Competitors of GE

Main Competitors ALSTOM

specialize in energy, ship buildings and marine systems and transport infrastructure.

Headquarters in Paris, France Acquired ABB (Asea Brown Boveri, a

leading competitor to GE) A force to be reckon with; would be

GE’s ultimate competitor

Main Competitors Siemens

electronics and electrical engineering company 6 groups:- Automation and Control, Information

and Communications, Medical, Power, Transportation, and Lighting

provides industrial automation and control, information and communications, lighting, medical, power transmission, and transportation products and services

Headquarters in Munich, Germany Subsidiaries headquartered in New York

Very similar to GE; strong brand name equity, has business operations in over 190 countries

5 Forces Model

Rivalry among competitors ALSTOM and Siemens, in

particular Creating competitive

advantages to gain bigger market share

Acquisitions, mergers and joint-ventures

Battle for innovation and technological improvements

5 Forces Model Potential of New Entrants

Adaptac (1981) and Adept Technology (1983) Late bloomers, but slowly gaining market

share Does not pose too much of a threat to GE,

ALSTOM or Siemens for now Tough for new entrants to pinch a sizable

chunk of market share from GE, ALSTOM or Siemens

5 Forces Model

Suppliers Materials, parts, components, other

resources Vertically integrated (GE Advanced

Plastics, GE Consumer and Industrial Manufacturing)

Has to be aware of suppliers that might integrate forward

5 Forces Model

Substitutes Has many substitutes that might pose a threat Very well-diversified which means that GE is

spreading the risk of failure in every market Eg. GE’s NBC-Universal’s substitute are pirated

VCD’s or DVD’s Buyers

Similar to its substitutes, GE has a broad line of buyers, ranging from consumers to large corporations

Eg. GE Healthcare’s buyers are hospitals and pharmacies.

Strategic Group Map

High

Low

LessDiversified

MoreDiversified

Adaptac

AdeptTechnology

General Electric

Siemens

Alstom

Product Range

Per

form

ance

/Pro

duct

Qua

lity

GE’s SWOT Analysis

Strengths Global strength and recognition

5th in Fortune 500 list, operating in more than 160 countries

Excellent management Proven leadership and business model Confident investors – raising capital

Diverse product range Long Term (GE Aircraft engines) Short Term (GE Lighting, Plastics, NBC) Financial Services (contributes to 40% of GE’s revenue) Spreading the risk of failure in every market and not just

one

SWOT Analysis Weaknesses

Company size/ acquisition restriction Eg. GE’s planned acquisition of Honeywell

International, a diversified technology and manufacturing company, specializing in aerospace products, was rejected by the EU

Energy Segment Underperforming, no signs of near future

recovery Flexibility

Large and diverse businesses might overstretch the company and reduce reaction times to shifts in targeted markets

SWOT Analysis

Opportunities Research and Development

Immense capital allows GE to contribute a lot to R&D for product development and improvement

Increased geographic growth Global expansion = more opportunities (Eg.

China) Merger between NBC and Vivendi

Further opportunities in the media business Improved customer services

Adopted a new customer focus initiative

SWOT Analysis Threats

Exposure to global economy Economy slowdown would affect GE, since 40% of

the revenue is generated overseas Exposed to currency fluctuations

Competition Constant change in technology heats up

competition Very diverse:- tough to be the best in all industry

Weighted Strength Assessment

Ratings Score

Key Success FactorsImportance

Weight GE ALSTOM Siemens

Product/Performance Quality 0.16 9/1.44 8/1.28 7/1.12

Recognition/Brand name 0.11 10/1.1 8/0.88 10/1.1

Managerial Ability/Leaders 0.13 9/1.17 7/0.91 7/0.91

Flexibility 0.13 7/0.91 8/1.04 7/0.91

Customer Service 0.10 6/0.6 7/0.70 7/0.70

Innovation/Technology 0.14 9/1.26 7/0.98 8/1.12

Distribution network 0.11 9/0.99 7/0.77 9/0.99

Financial Resources/Capital 0.12 8/0.96 7/0.84 8/0.96

Sum of importance weights 1.0

Weighted Overall Strength Rating 8.43 7.40 7.81

Key Competencies Competence

Great and proven leaders Eg. Jeffrey R Immelt, Jack Welsh,

Reginald H. Jones Expertise

More capital can be invested in R&D Core Competence

Innovative Desire to strive for perfection (6

Sigma)

Key Competencies

Distinctive Competence Ability to respond to the drivers of

change by understanding the important global trends

Acquisition of rivals and other companies

Strategies adopted by GE

Maintaining flexibility through acquisitions Some notable acquisitions in the past several years include: NBC Universal

In July 2008, NBC Universal announced plans to acquire The Weather Channel for $3.5 billion.The Weather Channel is the third most popular cable television station, as 97% of cable subscribers have The Weather Channel.

Healthcare GE's acquisitions of Amersham in 2004 and IDX Systems in 2006, which

manufacture products used in health care, have helped expand GE's presence in the industry. Revenues for GE's healthcare segment have since increased from $15.0 billion in 2005 to $17.0 billion in 2007.

Plastic business GE Supply and Advanced Materials was sold to offset the losses resulting

from the price inflation of raw materials, natural gas, and benzene. GE is now reportedly discussing the sale of its plastic business to Saudi Basic Industries Corporation (SABIC) for $11 billion. Unpredictable commodities prices have made it difficult for GE to achieve predicted earnings, driving the company to sell its plastic business. SABIC is 70% owned by the Saudi government, however, which could politicize the issue and present an obstacle to closing the deal.

Insurance GE has been selling off its insurance businesses in order to concentrate on

expanding its other divisions' presence in emerging markets. With the sales of GE Life, GE Insurance Solutions, and Genworth, the company completely exited the insurance business in 2006.

Focus on International Growth GE has been greatly expanding its presence across the

world, particularly in emerging markets. International markets often provide higher growth potential, driving GE's push into new geographic regions.

Growth through Acquisition and Sales of Underperforming Units

By summer 2008 GE revised its plans to instead spin-off the appliances division, valued at $4 to $8 billion, to shareholders as a independent company. This unit accounted for 4.2% ($7.2 billion) of GE's 2007 revenue. This is part of an ongoing process under CEO Immelt to sell off product lines with limited growth potential, which so far has included the sale of GE's private label credit card and the company's consumer finance unit in Japan, and refocus on areas of potentially higher growth, such as water treatment or aviation.

Environmental Leadership In May 2005 GE announced the launch of a

"Ecomagination" program intended to develop tomorrow’s solutions such as solar energy, hybrid locomotives, fuel cells, lower-emission aircraft engines, lighter and stronger durable materials, efficient lighting, and water purification technology. On December 28, 2008, new GE Energy Smart CFL lightbulbs, 15-watt energy-saving bulbs that look and function exactly like their 60-watt incandescent counterparts, will debut in Target stores.